other party relied on the misrepresentation then a remedy would be
granted. That remedy could be rescission and damages which is
equivalent to breach of condition at common law.
- Contract has its origin in common law.
3.4 Summary of Process in Construing a Contract
Step 1
Decide whether the contract is oral, written or a combination of the two.
Step 2
If it is wholly written then apply the personal evidence rule. A good
indication that the rule is relevant is a clause in the contract which statethat the parties agree that no oral statements will make the written terms.
Step 3
Apply the exceptions to the PER. Would the parol evidence:
- Explain a custom or trade usage;
- Identify a party to the contract or the subjected matter of the
contract; - Reveal that entry into the written contract was subject to a condition
yet to be fulfilled; - Show a collateral; or
- Prove that the written part was not the full contract.
Step 4
Check whether there is collateral contract in existence. While this
possibility is covered in the exceptions to the PER, it is necessary to
consider the issue on its own. Remember that the courts will not readily
find a collateral contract and there are three prerequisites: - The statement which forms the collateral contract must be promise
and otherwise fulfill the requirements of a contract. - The party to whom the statement is made must rely upon the
statement in entering the main contract. The best guide to a collateral
is where one party hesitates before signing a written contract but
eventually does so on the basis of a promise made by the other. - The collateral contract must be consistent with the main contract.